2024 (3) TMI 211 - HC - Income Tax

Prosecution u/s 276C (2), 276CC and 276C (1) - willful attempt to evade the payment of tax and the penalty under Income Tax Act - respondent initiated prosecution u/s 200 and 190(1)(1) of Cr.P.C. f or the offence under Section 276 C (2) read with Section 153(A) of the Income Tax Act - petitions have been filed seeking quashment of the private complaint proceedings made in C.C. pending on the file of the Judicial Magistrate No.III, Coimbatore - HELD THAT - It is seen that, the entire prosecution initiated as against the petitioner is in pursuant to the order of assessment and penalty under Section 143(3) read with Section 153A of The Income Tax Act, 1961. Now, the order of assessment itself is set aside and as such, this Court is of the view that, initiation of the prosecution as against the prosecution cannot be sustained till the fresh assessment order is passed and therefore the C.C pending on the file of the Judicial Magistrate No.III, Coimbatore are liable to quashed. Accordingly, these Criminal Original Petitions are allowed.

Summary

Issues involved:
The judgment involves the quashment of private complaint proceedings under Section 200 of Cr.P.C. and prosecution initiated under Section 276 C (2) of Income Tax Act, 1961, along with other related sections.

Details of the Judgment:
The respondent filed a complaint against the petitioner, alleging non-compliance with income tax provisions. The petitioner, engaged in various businesses, was found to have undisclosed income and investments during a search conducted at his residence. Despite notices and directions to file income tax returns, the petitioner failed to comply, leading to the initiation of prosecution under relevant sections of the Income Tax Act.

The petitioner appealed the assessment order before the Commissioner of Income Tax, which was confirmed. Subsequently, appeals were filed before the Income Tax Appellant Tribunal, which partially allowed the appeal. Both the petitioner and the Principal Commissioner of Income Tax filed appeals before the High Court, raising substantial questions of law related to the assessment years 2009-2016.

The High Court Division Bench allowed the Income Tax Appeals, setting aside the Tribunal's order and remanding the matters for fresh disposal. The demand notices were directed to be kept in abeyance for two weeks. The Income Tax Appellant Tribunal later set aside the Commissioner of Income Tax's order and directed the Assessing Officer to reexamine the transactions to ascertain the real beneficiary.

The Court observed that the prosecution against the petitioner was based on the now-set-aside assessment order. Therefore, the Court quashed the private complaint proceedings pending before the Judicial Magistrate No.III, Coimbatore.

Separate Judgment:
Hon'ble Division Bench of the High Court allowed the Income Tax Appeals, set aside the Tribunal's order, and remanded the matters for fresh disposal. The demand notices were directed to be kept in abeyance for a period of two weeks.